What Would You Do?

[inneedofhelp]

So, based upon my current salary, I anticipate being debt free in a little under 3 years---that is about $30,000+ of debt gone! Woopee!

BUT, I recently learned that there may be pay cuts at my job, and now I am not sure what to do.

My salary covers all of my bills, and a very, very small amount for food ($100). I don't have much left over, and any that I do have left over (usually under $40-$50 bucks), goes back towards food expenses, or oil changes, etc.

If my job has a pay cut, there is the possibility of losing between $200 - $400 from my check every month. With my budget so tight, this would be a severe impact on me.

I do not have an emergency savings---it is enough only for a couple of months rent, so I don't want to go into it if at all possible.

I do have some credit available on credit cards, but they are at the default interest rate, so it would be a high interest rate (I have asked the cc company to lower the interest rate to no avail, even though I haven't been late, no missed payments, etc.).

I have a small retirement account that I could borrow from. I know the penalty would be around 10%.

I could get a 2nd job, but to be honest, after having worked years and years of 2 jobs, my body is a bit pooped out and I think I would be even more tired with a 2nd job than I already am now. Plus, it is super hard to find even part-time work in my area.

What would you do in this situation? I have cut out everything except for the gym and the cell phone---I could reduce my cellphone bill by maybe half, and I could cancel my gym membership---though it would probably cost me more later to re-enroll in it. I have litterally budgeted every expenditure---from the cost of toilet paper per month, to how many gallons of milk I can buy per month in my food budget.

I am considering either going into my retirement funds, or trying to find a reputable debt consolidation company as my cc bills are super high, or filing for bankruptcy. The last option I want to avoid at all costs.
Is there such a thing as a reputable debt consolidation company that can shave off a few hundred from my bills?

What would you do in this situation? I am really kicking myself right now cause I know that only I am to blame for my financial problems and I can see being financially better off in a few years, and right now I am just worried.

[akrogers]

About a year ago my company cut our salaries by ten percent and I was faced with a similar situation. I cut down all my plans to the bare minimum and I ended up saving about $40 a month on cutting my cable plan. I have been eating on about $40 a month which includes no eating out or fast food. On the other hand, I don't drink milk- which is definitely expensive lately. In an effort to make money I have been emptying my clothes out at Plato's closet and am also selling a lot of unnecessary household items on Ebay, Craigslist, and Live Journal.

I would say to try to trim down even more than you already have and to definitely consider a second job if that doesn't work out. I think it would be better to take a second job rather than to get involved with a debt consolidation company.

[ActYourWage]

I am considering either going into my retirement funds, or trying to find a reputable debt consolidation company as my cc bills are super high, or filing for bankruptcy. The last option I want to avoid at all costs.
Is there such a thing as a reputable debt consolidation company that can shave off a few hundred from my bills?

I would not dip into my retirement funds...this only fixes the current situation. Work on fixing your money habbits. A debt consolidation company is not the answer. Why pay them money to fix your debt when in fact they may or may not help.

You are doing good by visiting savingadvice, but don't look for the quick fix to get you out of financial trouble that you built up over time.

[inneedofhelp]

I would not dip into my retirement funds...this only fixes the current situation. Work on fixing your money habbits. A debt consolidation company is not the answer. Why pay them money to fix your debt when in fact they may or may not help.

You are doing good by visiting savingadvice, but don't look for the quick fix to get you out of financial trouble that you built up over time.

I am not looking for a quick fix. As I stated in my post, I take responsibility for my debt, and, were it not for a potential cut in my income, I would be debt free in under 3 years. I am paying off my debt, and have cut out all of my excess expenses, with the exception of a cell phone, insurance, and gym. My food budget per month is $100. I am willing to cut out the gym and reduce the cell phone as well.

I am in a situation where I am not sure what to do if I cannot get a part-time job.

[wincrasher]

If you are to the point of budgetting toilet paper, then drastic action is needed before the pay cut comes.

Gym membership, cable, cell have to go. Try carpooling to work to reduce your auto expenses. Extra monies go to your EF.

Check your credit rating. You may not have much to protect. Short term default and settlement may be a better course than bankruptcy. You should find a non-profit credit counseling agency in your area to advise you.

Good luck.

[inneedofhelp]

If you are to the point of budgetting toilet paper, then drastic action is needed before the pay cut comes.

Gym membership, cable, cell have to go. Try carpooling to work to reduce your auto expenses. Extra monies go to your EF.

Check your credit rating. You may not have much to protect. Short term default and settlement may be a better course than bankruptcy. You should find a non-profit credit counseling agency in your area to advise you.

Good luck.

Well, I am not necessarily budgeting out each square, but in my budget I have alloted for toilet paper and paper towels and personal toiletries. I know where to buy the cheapest and longest lasting brands, and have an idea of how much I will need per month.

My credit score is in the high 600s, close to 700.

[tripods68]

Cancel membership and cell phone for at least 3 years.

I know jobs are tough to find right now. But I would look for another job that pay little bit more if you feel your company may eventually layoff people. Jump ship if you will.

If that's not an option and you feel your job is still secure and could get those pay cut back when the economy improves, I'd reconsider looking for a second job, at least temporarily. This should put you back up in the black if further pay cuts are indeed warranted.

[disneysteve]

So, based upon my current salary, I anticipate being debt free in a little under 3 years---that is about $30,000+ of debt gone!

Can you elaborate on this? Will you pay off over $30,000 in debt in less than 3 years making the minimum payments only or are you making extra payments to accomplish this?

If you are making extra payments, you can reduce them to free up cash. Yes, that means it will take longer to be debt-free, but that's a far better option than some of the other things you mentioned (debt consolidation, bankruptcy, raiding your retirement accounts).

If you are only making minimum payments now, then of course you don't have that wiggle room to work with. In that case, as stated, you need to either boost income or cut expenses or both. You've already identified at least two expenses that you can cut - cellphone and gym. The key is to cut them NOW. Don't wait until your income drops. Cut them now and use the savings to further attack the debt and/or build your EF.

If you are willing to post your complete budget, I'm sure lots of folks would be happy to make other suggestions.

[akrogers]

re: the toilet paper, my mom told me that when her and my dad were first starting out, they were so poor that McDonalds supplied all of their ketchup, napkins, and toilet paper (they used the napkins). Not that I condone taking anything from fast food restaurants, but I am just saying that when you are desperate you can still come up with ways to cut corners if you are resourceful

[Ima saver]

I would cancel the gym and the cell phone also. Cut back on drinking milk and stick to water instead. (It is so good for you) I have a friend that just started house sitting with pets and she is making some good money for very little work.(just feeding them and taking them out to potty) I would pay someone to do that for me rather than putting my dog in a kennel.

[disneysteve]

I'm glad a couple of others commented on the milk. I was going to say something but thought I'd get shot down. Milk is not a necessity. In fact, there are many people who feel we shouldn't drink it at all (but that's a whole other topic). Milk is cheap, but water is free. How many other items in your budget aren't really necessities? I think that's the question you need to be asking yourself.

[inneedofhelp]

Thank you, everybody.

The milk thing is, I guess in my thinking, part of my diet. When i get hungry at night, then I usually have a glass of milk, or I have milk to put in my instant coffee, or for cereal. I have decided to cut back on the milk to half a gallon a few times a month, versus a gallon a few times per month...yeah, i drink a lot of milk, it seems.

[disneysteve]

Gyms are luxury items for sure. Why do you think gyms have popped up on every corner and every strip center? Years ago, they were rare sights. People have become convinced that they must pay $50/month in order to exercise which couldn't be farther from the truth. You can exercise just fine at home with a minimal one-time investment - a good pair of walking shoes, some dumbbells, a yoga mat and not much else.

[creditcardfree]

I would definitely get a second job NOW or at least be looking and applying for one. This money could go to increasing your emergency fund before the cuts come. The job can continue to help you meet your needs.

I would also cut the cell phone and gym membership and other luxuries now...because that extra money could go to your emergency fund NOW.

[ActYourWage]

Gyms are luxury items for sure. Why do you think gyms have popped up on every corner and every strip center? Years ago, they were rare sights. People have become convinced that they must pay $50/month in order to exercise which couldn't be farther from the truth. You can exercise just fine at home with a minimal one-time investment - a good pair of walking shoes, some dumbbells, a yoga mat and not much else.

Good points about working out at home, plus having a healthy diet is probably 80% of the health problems anyway, so eating healthy helps.